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The bill of the Usury Act under fire after public consultation  


Michał Sadrak, | 12 January 2017

A majority of organisations and interested entities are critical of the bill prepared by the Ministry of Justice which seeks, among others, to further restrict non-interest costs. The public consultation also covered bonds unfortunately, however, they were contemplated in the context of potential problems with their redemption.

The original version of the document published on government websites contained information from correspondence to officials of the Ministry of Justice, which should not have been included in the document. At the request of relevant parties and after the document had been taken down from the website, we also removed from this communication some quotes taken from the document. The quoted person said during a telephone conversion with that the correspondence the fragments of which had been published on had been placed in a specific context and with a view to calming the situation and not aggravating it.

In general, institutions which decided to express their views during consultation agreed that the market required regulation in terms of unfair practices. At the same time, most of organisations and companies which will be affected if the bill passes stressed that the proposed limit was too strict and too little time had passed from the introduction of the previous limit in order to accurately determine the effects of the previous regulations.

Those who oppose the Usury Act argue, using more or less blunt language, that the entrance into force of the regulations in their current form would increase financial exclusion and cause growth of grey area (which opinion is shared by the National Bank of Poland). It is also argued that unemployment will grow, budget revenue will be reduced and GDP will further suffer on account of decrease in consumption.

Almost 30 entities, which included lending companies, commercial chambers, employers’ federations, law firms, associations (e.g. of notaries public, judges), state credit union or even the Polish Bank Association, participated in the consultation. What is more, seven institutions expressed their opinion during the consultation, including the Polish Financial Supervisory Authority, the National Bank of Poland or the Office of Competition and Consumer Protection. Of course not all positions were equally critical, some of them focused on technical aspects of the bill only.
The issue of debt securities was addressed not only as a source of financing of lending companies. The Chamber of Brokerage Houses suggests that corporate bonds be excluded from the act so that the non-interest costs can be freely shaped. The Chamber of Brokerage Houses reminds that the act on bonds currently in force excludes the application of the provisions on maximum interest to debt interest rates. The Chamber also looked at the issue of security. After the passing of the bill, securities with a value of 150% of the face value of issue would disappear from the market which, in the Chamber’s opinion, could be “catastrophic for the entire debt financing market”.

As part of the public consultation, the issue of bonds, in terms of both costs and securities, was discussed by BSWW Legal & Tax the opinion of which was published on in the middle of December.


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